Trump eases tensions over China, Iran

US President Donald Trump has offered an olive branch to China after days of intense feuding over trade and opened the door to diplomacy on Iran, easing tension on the last day of a strained G7 summit.

The leaders of the world's major industrialised nations, meeting in the French coastal resort of Biarritz, look set to reach an agreement on how to help fight the Amazon forest fires and try to repair the devastation.

While they are not expected to leave with a more comprehensive set of agreements or even a joint communique, Trump and his Western allies appear to have agreed amicably to disagree on issues dividing them.

Trump, a turbulent presence at last year's G7 gathering, insisted during the Biarritz meeting that he was getting along well with other leaders of a group that also comprises Britain, Canada, France, Germany, Italy and Japan.

The trade war between the United States and China, the world's two largest economies, escalated on Friday as both sides levelled more tariffs on each other's exports, sending more shockwaves through financial markets.

Speaking on Monday, Trump said he believed China wanted to make a trade deal after it contacted US trade officials overnight to say it wanted to return to the negotiating table.

China's lead negotiator in the US trade talks said earlier on Monday Beijing was willing to resolve its trade dispute with the United States through "calm negotiations" and resolutely opposed the escalation of the conflict.

Trump hailed Chinese President Xi Jinping as a great leader and said the prospect of talks was a very positive development.

"He understands, and it's going to be great for China, it's going to be great for the US, it's going to be great for the world," he said.

Trump also backed away from confrontation over Iran, a day after French President Emmanuel Macron stunned other leaders by inviting Iran's foreign minister to Biarritz for talks on the stand-off between Washington and Tehran.

Trump told journalists that they had been wrong to report that he was blindsided by the five-hour visit of Mohammad Javad Zarif to the summit's sidelines, and said that while he thought it was too soon for a meeting he had no objections to it.

Trump indicated an openness to discussions with Iran on a nuclear deal and said he was not looking for regime change.

"I'm looking at a really good Iran, really strong, we're not looking for regime change," he said. "And we're looking to make Iran rich again, let them be rich, let them do well."

French and US negotiators meeting behind the scenes reached a compromise agreement on France's digital tax, a levy that had prompted Trump to threaten a separate tax on French wine imports.

France's 3 per cent levy applies to revenue from digital services earned by firms with more than 25 million euros in French revenue.

US officials complain it unfairly targets US companies like Facebook, Google and Amazon.

A source close to the negotiations said the deal envisaged that France would repay to companies the difference between a French tax and a planned mechanism being drawn up by the OECD.

The G7 leaders were due to discuss climate change in one of their final sessions on Monday and were expected to consider a deal on technical and financial help for the Amazon.

A record number of fires are ravaging the rainforest, many of them in Brazil, drawing international concern because of the Amazon's importance to the global environment.

Macron shunted the fires to the top of the summit agenda after declaring them a global emergency.